CIOs Get Ready to Hire in the Summer

June 11, 2007 Timothy Prickett Morgan

The IT business took it on the chin seven years ago after spending like a drunken sailor on dot-com businesses and application modernization efforts, and in the wake of the global recession after the September 11 terrorist attacks, companies not only stopped hiring IT staff, they put projects on hold and, in some cases, they let go of employees they could no longer afford to keep. What a difference six years makes. According to Robert Half Technology, which has been monitoring IT hiring practices since 1995, the increase in expected hiring in the third quarter is the highest since the fourth quarter of 2001.

RHT does a quarterly survey of IT shops in the United States, gauging both the intent of CIOs to hire staff and the level of salaries across various positions. The company gathers the data on a regional and industry basis from a survey of over 1,400 companies with at least 100 employees, and last week RHT put out the results of its latest poll on IT hiring expectations for the third quarter of 2007. Across the United States, 17 percent of the CIOs polled said that they would increase their hiring in the third quarter, while only 2 percent said they planned to make decreases. Some 77 percent of those polled said that they didn’t plan to make any changes, and the remaining 4 percent were honest enough to say that they didn’t know what they were going to do.

The Middle Atlantic and New England states, which were hardest hit in the IT recession of 2001 and 2002, are now thankfully showing some of the biggest percentage gains in expected hiring. They are, of course, climbing out of a deeper hole, says John Estes, a vice president for research at RHT, since these areas, along with the Pacific Northwest and Silicon Valley, had many more job seekers than jobs for a while. Here’s how the numbers break down by geographical region:

Third Quarter Expected IT Hiring, By Region
	Increase	Decrease	No Change	Don’t Know
United States	17%	2%	77%	4%
New England	19%	0%	81%	0%
Mid Atlantic	20%	1%	72%	7%
East N. Central	13%	0%	85%	2%
West N. Central	8%	4%	85%	3%
South Atlantic	15%	4%	76%	5%
East S. Central	17%	1%	78%	4%
West S. Central	18%	4%	77%	1%
Mountain	21%	7%	67%	5%
Pacific	21%	1%	73%	5%

The growth in expected hiring among IT organizations in New England and the Mid Atlantic states is particularly encouraging. “When 9/11 hit, the Northeast was like a light switch. It just turned off,” says Estes. The Pacific and Mountain states are likewise seeing an increase in the prospect of hiring IT staff as well, but 7 percent of the CIOs in the Mountain states are also expecting to cut staff in the coming quarter of this year, too, which is a bit ominous.

Estes says that the effect of offshoring and outsourcing is a bit overblown in the media, and that the reality is that companies, having gotten a few years of stable revenue and profit growth, are now in a position to invest in new technologies again. And the ability to save funds by consolidating data centers, servers, operating systems, and application stacks is helping to fund application development projects that have been mothballed for many years, as well as new projects that are perceived as being critical to business growth. “It’s not like the out-of-control situation of the dot-com boom,” explains Estes. “Everything in IT is now about return on investment, not just about building a better mouse trap. It is about business, not technology. Which means hiring is not crazy, but slow and steadily growing.”

Third Quarter Expected IT Hiring, By Industry
	Increase	Decrease	No Change	Don’t Know
All Industries	17%	2%	77%	4%
Manufacturing	12%	2%	86%	0%
Retail	18%	2%	76%	4%
Finance, Insurance, Real Estate	14%	1%	73%	12%
Professional Services	17%	2%	76%	5%
Construction	8%	7%	83%	2%
Wholesale	24%	0%	74%	2%
Transportation	17%	1%	81%	1%
Business Services	18%	4%	71%	7%

IT hiring is expected to grow fastest in the retail, wholesale, and business services areas, according to RHT’s survey results for the third quarter. But Estes says that financial services, insurance, and healthcare remain big consumers of IT managers and programmers. In fact, he says that during the IT downturn six years ago, hiring in the healthcare sector remained strong.

Of course, projected hiring is not the same thing as hiring. The real question is whether or not the expectation of hiring maps to the reality of what happens. A year ago, RHT was projecting good hiring in 2006, and according to Estes, the projections were more or less met.

One of the effects of the IT downturn is that companies were spoiled–there were a lot of skilled technical people choosing too few jobs, which had the effect of keeping salaries low. This year, Estes says that companies are not just looking for skills like database or Java programming, but more rounded programmers who also do project management as well as database work. Companies are also looking for more interpersonal, verbal, writing, and business skills, too–and they have to pay a premium to get them.

“Some people are stuck in 2003 and 2004 when it comes to salaries,” warns Estes. “They say that there are no IT people out there. They are there. You just have to pay for them, and you have to attract them because many of them already have pretty good jobs.”

As for reasons driving the hiring in IT shops, 39 percent of the CIOs said that they were doing so to drive company revenues or expanding the business; 27 percent said that customer and end user support demands were driving the hiring, while the development of new applications and system upgrades each accounted for 12 percent of responses.

Windows server administration is still the most sought-after skill, and was cited by 79 percent of the survey respondents, followed by network administration (72 percent) and database management (64 percent). The CIOs polled were able to have multiple responses.

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